“There is no limit to how low rates can go and how large foreign currency reserves can grow… The message is that if it’s not enough, we will do even more… Either we can expand our balance sheet or we can go deeper into negative territory with the interest rates. That is a possibility and no one should try to outguess us here…We can go on forever.” ~ Lars Rohde, Denmark Central Bank Governor, February 2015

By Catherine Austin Fitts

As discussed in our Annual Wrap Up, the geopolitical ground is shifting under our feet. This has profound implications for global valuations – indeed watching global valuations offers important insights on the rebalancing of the global economy.

In our 1st Quarter Equity Overview this Thursday, I will review global valuations in the equity markets, the impact of sovereign fiscal policy and central bank monetary policy and what the trend in valuations tell us about long term opportunities and risks.

At subscribers request, I will also address specific questions:

the outlook for the US dollar and the impact of dollar performance on the US stock market;

issues and options to consider for your portfolio and investment strategy;

a serious deflationary scenario – could it happen and what would the implications be for your strategy; and,

the pros and cons of direct securities registration.

Please do post or e-mail your questions before Thursday.

The “Planet Equity” and “Financial Markets Round Up” sections of the Annual Wrap Up are excellent background for our discussion, so take a look if you have a chance.

In Let’s Go to the Movies, I will review an excellent German Documentary, Der Banker: Master of the Universe which provides remarkable insights into the global financial markets.

Oil and gas prices have dropped by almost 50% over the last year, with significant consequence to the values of companies, currencies and the balance of trade between nations.

What is causing this drop? Clearly, the “Oil Card” is at play – the US manipulating prices lower to pressure Russia as part of economic sanctions. No doubt, a slowing global economy is also reducing demand. However, a wide range of new technologies are also at play – from fracking technology to a global smart phone revolution to increasing productivity in material sciences and renewable energy. However, there is always the possibility of breakthrough energy innovations in the mix.

To explore what is happening in breakthrough energy, I asked industrial scientist Joel Garbon, head of the New Energy Movement, to join us on the Solari Report to update you on the innovations underway. What is the likelihood that breakthrough energy may impact the economy in the foreseeable future? Talking with Joel is always a fascinating exploration of what is possible.

Meantime, reports in the markets are that first time home buying will be rising this year, kickstarting the bottom up cascade that revives the housing market. Homeowners at the lower end sell to first time homebuyers, and then proceed to trade up to a bigger, or more expensive home.

“In a digital age, data about money is worth more than money.” ~Nicholas Negroponte

This week, the Director of Research at Truth In Accounting in Chicago, Bill Bergman, joins me for a discussion of financial transparency. Bill has a remarkable background – economist at the Federal Reserve and analyst at leading brokerage and investment research companies. Bill also has a history of using financial transparency to ensure that our resources are lawfully managed. He was forced out of the Fed when his research into money laundering got too close to the truth. A rare breed among first rate economists, Bill does not stop with the official reality. He follows the money to find the real opportunities in the real economy.

Do you think “financial transparency” is a mundane topic? Think again! This is about “money hunting!” Let me give you some examples.

Despite an excellent employment history, you are unable to find a job and are living on unemployment insurance and food stamps. You call the support phone line for food stamps and get someone in India working for JP Morgan Chase to answer your questions. This means the US government is paying you to not work when you could be working and paying taxes doing that job. The government is, in fact, spending more money to ensure that you do not have a job. And to do so, they are paying an extra mark up to a bank that received bailout gifts in the billions.

Then you realize that farm land in your county is lying fallow funded with federal farm subsidies surrounded by people with no work who are drawing federal government subsidies. However, your food stamps are paying for food shipped in thousands of miles from Latin America. Why not grow fresh food locally if it lowers subsidies being paid to people who are not working? Perhaps healthy, fresh food would lower health care expenses as well. The government is, in fact, spending more money to ensure that they finance large corporate systems outsourcing food production to other countries.

The economics made no sense – a complex drain of tax dollars and financial debasement. It does, however, make sense for politicians whose campaigns are funded by the resulting capital gains on the stocks of the corporations that operate the system and win the government contracts.

If you follow the money, opportunities to generate income locally in a manner that would save government money are everywhere.

Corporate contractors paid $25-150 an hour plus mark up by the federal governments to do jobs that could be teleported into your community. Your neighbors currently living on government subsidies would love a job for $10-20 an hour plus health care insurance. Local businesses will not get the opportunity to compete because the government contract budgets are not accessible;

Perhaps you do not notice the FHA foreclosed property across town that could be purchased and rehabbed for $100,000. Yet, it sits empty while HUD funds a public housing complex rehab for $250,000 per unit. Costs are loaded up with generous “fees for our friends;”

You have not thought about the federal prison in the next county. Your spouse is working two jobs to cover household expenses and to pay federal taxes. In an entire lifetime, your family will pay $154,000 in federal income taxes. It turns out that this is the cost for one year for one prisoner to process through the criminal justice system. If you understood what it cost you, maybe you would feel differently about incarcerating non-violent criminals for growing medicinal marijuana for people who can not afford health insurance; or,

Maybe you would have felt differently about the bailouts if you have known that the banks enjoyed gifts and loans in an amount equivalent to at least several multiples of all of the outstanding residential mortgages in the country.

There is no more powerful tool to bring about real change than financial transparency. Turn on the lights and the profit potential is everywhere.

The Government Pension Fund Global (Norwegian: Statens pensjonsfond Utland, SPU) is a fund into which the surplus wealth produced by Norwegian petroleum income is deposited. The fund changed name in January 2006 from its previous name, The Petroleum Fund of Norway. The fund is commonly referred to as The Oil Fund (Norwegian: Oljefondet). As of the valuation in June 2011, it was the largest pension fund in the world, although it is not actually a pension fund as it derives its financial backing from oil profits and not pension contributions. As of September 30, 2014 its total value is NOK 5.534 trillion ($857.1 billion), holding one percent of global equity markets. With 1.78 percent of European stocks,it is said to be the largest stock owner in Europe.

Seven years after the bursting of a global credit bubble resulted in the worst financial crisis since the Great Depression, debt continues to grow. In fact, rather than reducing indebtedness, or deleveraging, all major economies today have higher levels of borrowing relative to GDP than they did in 2007. Global debt in these years has grown by $57 trillion, raising the ratio of debt to GDP by 17 percentage points (Exhibit 1). That poses new risks to financial stability and may undermine global economic growth.

“China’s economy and people are evolving rapidly, but the underlying cultural blueprint has remained more or less constant for thousands of years.” ~ Tom Doctoroff

By Catherine Austin Fitts

At our family dinner table, my father would tell stories of living and working on the Burma-Chinese border under General Stillwell’s command during WW II. A portion of the University of Pennsylvania Hospital had been “lifted” by the US Army and sent to China. My father’s admiration for “Vinegar Joe” made The Stillwell Papers required reading in our home. It was matched by his admiration for the Chinese people. Stories of China wove threads of a fascinating people and places into our worldview.

[CAF Note: Scoop’s contribution to free press globally is a modern day David and Goliath story. Great reporting requires great publishers and enlightened owners to back them up – and Scoop has been there for scores of reporters and truthtellers around the world for many years. When the courts were not there, Scoop’s leadership on outing Enron and the people behind them played a critical role in making sure the court of popular opinion did work. Ditto on early transparency about the US mortgage bubble and fraud and corruption in the US federal finances – thousands of people knew how to protect themselves before the bubble burst. Scoop changed the course of history with their support of 911 disclosure, UnansweredQuestions and Paul Thompson’s timeline, well ahead of the US press. All of this while sticking to the nuts and bolts of supporting literate citizens and democratic process in one of the most active, entrepreneurial, engaged countries in the world. You would do me a great honor by joining me in supporting the Scoop crowdfunding effort. No amount is too little. Every contribution is appreciated and counts!]

by Alastair Thompson

At Scoop we believe that access to independent news and investigative journalism is a public right that is essential for democracy to thrive. But it is a public right that is eroding. Digital technology now enables a business model to be developed that makes news freely accessible to all citizens, and in which the news apparatus itself can be transparent. Creating this new kind of news organisation is what “Operation Chrysalis” is all about. We are taking a bold step to preserve the public right to access news.

We plan to transform into a not-for-profit media organisation held for the benefit of all NZers, accountable to the community of news communicators and consumers it serves.

“There is no limit to how low rates can go and how large foreign currency reserves can grow…The message is that if it’s not enough, we will do even more…Either we can expand our balance sheet or we can go deeper into negative territory with the interest rates. That is a possibility and no one should try to outguess us here…We can go on forever”.

Disclaimer
Nothing on The Solari Report should be taken as individual investment advice.
Anyone seeking investment advice for his or her personal financial situation
is advised to seek out a qualified advisor or advisors and provide as much
information as possible to the advisor in order that such advisor can take
into account all relevant circumstances, objectives, and risks before rendering
an opinion as to the appropriate investment strategy.